Productivity boost: India's increasing R&D spending may not be enough

While it is essential to have large corporations leverage economies of scale, the government must ensure that firms do not use their dominant positions to stifle competition

It is often argued that India needs to substantially increase its research and development (R&D) capabilities to improve productivity, which is essential to compete in global markets. This, it has been pointed out, will also help expand India’s industrial base and create employment. Unfortunately, India’s spending on R&D, which is about 0.7 per cent of gross domestic product (GDP), is much lower than that of its peers and is a big impediment to accelerating economic growth. According to some experts, India needs to increase R&D expenditure to about 3 per cent of GDP. Industrialist Naushad Forbes has